The construction industry is inherently prone to litigation since claims are normally affected by a large number of complex and interrelated factors. Construction projects are fertile breeding grounds for disputes and conflicting claims often arise between the many parties involved in any given undertaking. Construction disputes can arise from interpretation of the contract, unforeseen site conditions, variation orders by the client, acceleration and suspension of works, and so on. Almost any aspect of the construction process can trigger a dispute, but, put simply, most construction disputes can be boiled down to one or more of product, people and process, where product is the building itself, the people are those working on the project and process is the planning and work done to create the product.
In a complex environment, such as a construction site, it can be difficult to generate the records necessary to provide a “paper trail” of the project for warranty, liability, management and/or other purposes. For example, if an installed building component such as, e.g., a roof fails inspection, then it will be necessary to retrieve information about the construction of that component, including the materials specified, the materials actually used, and the number of hours expended by the roofing contractor to construct the roof. Similarly, if the roofing contractor seeks additional payment for a change order, for example, the contracts will require submission of detailed records supporting that additional work.
Often, personnel who are employed in such construction settings do not keep accurate records about their time working on the site. Workers at the site (electricians, plumbers, welders, etc.) are tradesmen skilled in their field, but not trained, equipped, or necessarily willing to collect detailed and reliable data at a construction site. Moreover, such workers are more likely to be transitory and, as such, may be difficult to locate months or years after completion of the project if testimony about their activity on the project is needed, such as in a legal dispute or in a regulatory inquiry, the latter of which can include wage and hour or safety investigations.
Often, the claims arising in a construction dispute are intertwined, meaning the identification of the specific reasons underlying a complaint or dispute will involve the arduous task of going through a wide variety of records generated during the construction project in the attempt to discern the proximate cause of the defect or dispute at issue. Because construction records are typically not generated or stored in a form that aligns with the factual record that needs to be developed to make a legal claim, construction disputes are often fraught with subjectivity. Such project complexity and subjectivity combine to make construction projects expensive and cumbersome to litigate. Accordingly, those contractors or owners who are entitled to recover damages for non-performance, defects or other breaches of the construction contract(s), may decline to pursue a claim that may cost them more to litigate (or mediate or arbitrate) than they stand to recover in damages.